My sale wants to grow up and become an order

I currently consult across multiple clients. They all are retailers, in different segments. At one retailer, we are defining a roadmap for a order management solution. In the course of our discussions, a question keeps getting raised about the sale made in the store: Is that an order?

You walk into my store, you pick something up, want to buy it, take it to the register, pay for it and take it home. In this entire transaction, you interacted with my company. You took something out of my inventory and paid me cash. In retail lexicon, this would be called a sale. However, if you were a business, and sent me a purchase order, and I responded by creating a sales order and then shipped it to you and invoiced you, the sales order is what would be called a order.

So, a customer transaction in store is a sale, and a B2B transaction is obviously an order. What about an e-commerce B2C transaction? Other than the fact that the customer's ship to address, payment information, and bill to address is available with me, how is this different from a sale? Should I encourage my sale to grow up and become an order?

I think the difference lies in how B2C transactions have led to evolution of the customer relationship. Prior to dot com and online stores, the businesses were my "big" customers. I had relationship managers and account managers for the businesses I dealt with. As far as the store walk-in customer is concerned, I was nice to them when they walked in and I encouraged my sales persons to build relationships but it was impossible to focus on each customer relationship as if it was a business we were dealing with; it just won't scale. You never knew if all the relationship building was "worth it".

As the B2C model has evolved, order management systems have evolved to enable companies to electronically pursue each individual customer. If you register on my website, I will remember your preferences, show you products that you may like, show you other products that people with similar purchase histories have bought. I will follow up after a purchase, ask you to write a review, ask you to rate your experience. I will send you emails on newer products, will send you a birthday e-coupon, I will have a relationship with you. The online OMS/e-bot/site-'thingie' is the personal relationship manager (and for a lot of people, maybe their best online friend :) - they are a facebook friend, twitter follower!). This aspect is what I think makes it very interesting for the stores.

If my POS system could register the customer and treat each retail sale as a B2C order, I can unleash my entire relationship suite and try to build a connection with every foot fall. This may not lead to a long term relationship for every customer, however my actual cost per transaction is just my system whirring away. Storing the retail sale as an order against the customer is key to success since every aspect of the customer's interaction needs to be visible to my virtual e-relationship manager.

What are the questions and challenges this throws up?

Post publish edit: 5 seconds after I published this I notice this very interesting entry by Guneet on this blog on nearly the very same topic :)

Posted by Chandradeep Bandyopadhyay on February 2, 2010 3:28 AM|Permalink

Comments

The inventory levels required to be maintained for supporting a sale will be much more than those required to service similar orders. Even if there is some presentation stock which has to be maintained at the store the retailer should probably encourage a customer to get a free home delivery or a lower price or some other sop in case they accept a home delivery in a matter of 3/4 days. This will allow the retailers to consolidate and maintain stocks at lesser no of pool points/ warehouse it will help them consolidate their demand and finally reduce the inventory levels. Converting the sale to an order will also get the customer registered in the retailers CRM and the customer might as well answer a few questions to be able to profile him/ her. This will be probably be similar to a catelog store aka Argos.

For Retailers the key to doing this would be to maintain a personal connect with their customers, even after the “sale” is completed. Ironically for a Face2Face transaction, the relationship between the retailer and the in-store customer rarely lasts beyond that transaction itself, whereas the retailer is far more likely to continue the relationship with their online customers. This can be attributed to the fact that retailers have figured out a pretty effective way of obtaining personal information such as e-mail IDs, telephone numbers etc from their online customers (though those customers may have originally registered on the retailer’s website merely to track the status of their orders). Retailers however are coming up with innovative ways to gather such information from their in-store customers too. Inviting customers to enter into draws (wherein the customers often fill out a form to provide some personal info) has been a pretty old trick. Coaxing the customers to text the Retailer is another way to do this. Here’s (http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/14048) an interesting discussion on “Retailwire” on how retailers are using texting to establish a recurring relationship with their in-store customers.